Does Rent Control Work? What the Evidence Really Shows

 

 Jonathan Smith 
12/2/25

As rents rise and housing affordability becomes a global flashpoint, rent control, or rent freezes, is often sold as an easy solution. Cap the price, help tenants, problem solved. But a major 2024 report from the Institute of Economic Affairs (IEA) asks a harder question: What are the real effects of rent control?

After compiling just under 200 academic studies, the report’s answer is clear: rent control delivers short-term benefits for a lucky few, but causes long-term harm for the broader housing market.

Where Rent Control Helps

Rent control lowered rents for those units that were regulated. This led to tenants who already occupied them being the beneficiaries of below-market rent. Unfortunately, the positives end there, and the overall effects do not.

Where Rent Control Backfires

Reduction in Supply of Rental Homes – Most studies show landlords respond to capped rents by selling or converting their properties. Fewer rentals, tighter markets, and fewer options for everyone else.

Discouraging of New Construction – Developers avoid building in markets where returns are artificially suppressed. Over time, the shortage of housing grows worse.

Misallocation of Housing – Because supply is fixed and demand isn’t, rent-controlled systems create waiting lists, hoarding, and mismatches between tenants and units.

Rise of Rents in Uncontrolled Units – When demand spills over into the unregulated market, prices spike for everyone else.

Pressure on Landlords Toward Selling – Many markets experience a shift from rental housing to owner-occupied housing, reducing the long-term rental stock.

The mechanisms of this process are simple. The capped rent reduces incentives to build and offer rental housing. As the number of rental properties being offered falls, demand rises, creating worse scarcity. Tenants that were able to start with the cheap units cling to them, blocking the natural flow of the housing market. Finally, developers avoid cities with difficult rental policies.

The increase in rent is a real issue, one that is hurting many Americans. However, freezing the rent is a remedy that is too simple, a remedy that would do a lot more harm than help. As rent-freezing policies become more popular at the ballot box, everyone should look at the real effects before they buy into the glamour that these types of policies offer.

To learn more visit the link below

https://iea.org.uk/publications/rent-control-does-it-work/?utm_source